These essays discuss discrepancies in modern portfolio theory (MPT) that can be resolved by technical analysis. In portfolio theory, asset classes’ correlations with other asset classes, their standard deviation of returns, and their expected returns are the only inputs needed to create a “global market portfolio,” which can be defined as the an optimal portfolio, whose cumulative weightings of all asset classes maximize the expected return per unit of risk. Of the three variables, two are the result of similar statistical operations. Holding an asset class in isolation, it is comprised of a standard deviation and an expected return. As such, these two variables are a corner stone of MPT. The two essays that follow present issues surrounding these variables. Essay I: The New Liquidity Premium The standard deviation of returns is one definition of risk for an asset class. Assuming this is a valid definition, there still remains an inadequacy in its

For the third year, the Market Technicians Association Educational Foundation (www.mtaef.org) “Take an Analyst to Lunch or Dinner” was a success! Over the summer, a global collection of top-shelf analysts and traders was assembled. This year volunteers ranged from the Far East (Marc Faber) to Switzerland (Felix Zulauf) to London (Tony Plummer), and an “A to Z list” here in the United States from the east to west coasts. Some bids came in early and ramped up quickly and, for others, the bidding came in late but furious. When the 10-day auction window closed, one winner donated $3,310 to take Dan Zanger to lunch or dinner! Mr. Zanger has since agreed to a lunch or dinner with an unsuccessful bidder who kindly matched the $3,310 bid! You can meet him on November 8th at the MTAEF Annual Fundraising event at Baruch College in New York City (http://go.mta.org/157). Marc Faber was also very popular with

Maverick is the charting platform available from TraderMade. This is an extremely versatile package, with full charting and trading functionality combined with a comprehensive news and analysis service known as InterpreTA. TraderMade has been providing charting solutions since 1984. It is a company that supports the highest professional standards in technical analysis. Most positions at the company require that the individual will be expected to complete a Diploma in Technical Analysis from the STA (or IFTA or MTA), and they are expected to begin the program shortly after starting work with TraderMade. The commitment to technical analysis is obvious in their products. The software offers the typical suite of technical analysis tools. All indicators and drawing tools are easily accessible via menus or shortcuts. An example screen shot is shown below, with Fibonacci levels, moving averages, trend lines and annotations added to the chart. Among the less well known indicators offered in Maverick

How would you describe your job? I trade my own personal accounts and have a retail and institutional consulting business. My 11 year old daughter described it the best: “My dad looks at charts all day.” What led you to look at the particular markets you specialize in as opposed to another tradable? I trade mostly stocks but I will trade other markets. Less efficient markets tend to trend better than well watched markets. Those more efficient markets are a crowded playing field. Participants often cancel each other out. This makes for choppy trading. Someone’s not going to wake up tomorrow and say, hey, there’s this thing called the Emini or the EUR/USD. Somewhat less liquid stocks (within reason) can have some really nice trends as they are discovered. This is not to say that I won’t ever trade a market like Forex. You just have to pick your spots carefully. In more

In the September issue of Technically Speaking, we presented a case study where a CMT candidate stumbled upon information about a pending takeover while working in a part-time job that was unrelated to any professional investing activity. Our conclusion was that the candidate could not act on the information without violating the MTA Code of Ethics. A reader offered the following rebuttal: “I do not agree with your answer to the Ethics Corner question about the CMT candidate who came by a draft press release while engaged in cleaning an office. The protagonist did not know whether the draft press release reflected the current thinking of the investment bank. If the bank changed its mind, the discarded press release would be of no use.  It is true that CMTs are required to be scrupulously above suspicion regarding non-public information. But then, so are bankers. If the banker was careless enough to not shred the

The CMT Board of Governors (BoG) is pleased to announce the creation of the full time position of Director, CMT Studies. The immediate responsibility of this position is the development and integration of CMT study materials, including Learning Outcome Statements and a customized curriculum for our candidates. This full time staff member will also participate in coordinating the work of Subject Matter Experts in the preparation of CMT exams. This position will report to the Executive Director of the MTA, with a strong working relationship to the Chairperson of the BoG and the BoG itself. The ideal candidate will have, as a minimum, a graduate level degree and at least 5 years of relevant teaching experience, with an emphasis on distance learning. They will have a strong, comprehensive knowledge of the financial markets, with the Chartered Market Technician (CMT) designation preferred, but not required. This individual must have excellent verbal and